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RALEIGH – N.C. lawmakers are on the verge of tax reform that could shift the burden to the middle- and lower-income classes.

A compromise bill seeks to implement reforms such as sales tax expansion, elimination of the annual tax holiday, the $50,000 business income deduction, and personal income exemptions. The bill is expected to pass both chambers of the Republican-dominated General Assembly this week and signed into law by Gov. Pat McCrory.

The North Carolina Justice Center, a progressive think tank, contends that when taking into account both the joint tax plan and the loss of the state earned income tax credit, the bottom 80 percent of taxpayers would bear increases next year.

"I thought the tax bill was going to close the loopholes. They did not close any loopholes," Raleigh City Council member Eugene Weeks said. "It really helped businesses and expanded the holes where they can tax the lower income and hard working people."

Octavia Rainey, a Southeast Raleigh activist, said a bill that cuts the tax holiday would be a detriment. She said families save their money for this day so they can buy more school supplies. In Rainey's own neighborhood she would take 10 kids shopping to take advantage of the break.

"This could be the last tax-free August we have," she said.

The Economic Incidence Analysis model is used by the Budget and Tax Center. It uses tax return data on real-world taxpayers and other economic data to create the most accurate prediction of taxing practices on taxpayers.

The sample taxpayer method, used by the North Carolina's Fiscal Research Division looks at how tax changes may affect hypothetical taxpayers. It measures possible outcome, thus its usefulness is narrow.

Weeks said the bill would affect middle- and lower-income taxpayers weren't considered in the bill - just the millionaires and corporations who are getting breaks. "It is disgrace to our state and the city of Raleigh and its citizens," he said. "I can't go along with their bills, I can't go along with it. It's just the wrong way to go."

N.C. Rep. Marcus Brandon (D-Guilford) said his constituents are up in arms about paying more taxes on basics like electric bills. He said he wants his colleagues to understand that all they really did was shift the tax; that everything still needs to be paid for.

"Lower class people use more public services and this is what is getting taxed," he said.

…"The ones who got the biggest hit are the ones who keep the economy going and it's very, very, very unfortunate."

Weeks says the bill is just another burden besides what they are already trying to do as working and middle class people.

"You're trying to save up for your later years in life and they're trying to tax you on money you haven't even made yet," Weeks said.

Rainey says there should be public committee meetings across the state for a year before a bill is signed. She said this would give everyone an opportunity to voice their opinions on such bills – then the legislature would have something to base a decision on.

"Our tax code, we've had it (since the 1930s) and you can't take three months and say we are going to rewrite them," Rainey said. "It can't be an overnight process."

Comments

Ms. Rainey is a brain and very couragious, speaking for the under-dog; legally and morally. We need more strong women like her. I would be happy to be a part of her solutions. Count me in , Octavia!